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Ontario needs a bold new steel strategy

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The fallout from the recent chaos in the British steel industry should look familiar to many Ontarians. Major steel producers in the province, most prominently U.S. Steel Canada in Hamilton and Essar Steel Algoma in Sault Ste. Marie, have shed jobs and filed for bankruptcy protection in recent years and there is little sign of ongoing slow-drip of bad news being halted any time soon.

Much of this continued pain for workers, pensioners and community rests on the lack of action by governments. Just as Jeremy Corbyn's Labour Party has proposed a bold plan to save the Port Talbot facility of Tata Steel, so too should Ontario's leaders in all levels of government look to a develop a robust, strategic response to our own crisis in steel.

The development of a steel strategy must begin with a recognition of the critical place in direct and indirect employment that the steel industry has in communities across Ontario, most notably Sault Ste. Marie and the Hamilton region. The industry, the people it employs and the communities it supports, should not simply be left twisting in the global winds whilst unfairly subsidized competitors continue to erode natural advantages and cause further decline.

Three-pronged approach to save Canadian steel

Government policies should engage in a three-pronged approach of supporting current workers and retirees through the recent difficulties in the industry, ensuring maximum spin-off employment value for upcoming infrastructure projects and harnessing Ontario's natural resources in the Ring of Fire region in a way that encourages in-province upgrading on a full-cycle basis. All of these should be linked to broader government strategies linked to high-skill manufacturing and carbon output reduction.

Given that both Essar Steel in Sault Ste. Marie and the U.S. Steel stake in Hamilton are currently in creditor protection, and thereby attempting to shed pension liabilities even whilst continuing CEO bonuses, it has become very clear that existing law in this area is inadequate. It should not be the case that pensioners and workers are made to pay the cost of poor management decisions that they did not cause.

For this reason, both the federal and provincial governments should pass legislation which give priority to pensioner and worker liabilities above shareholders when companies enter creditor protection or otherwise become insolvent. Though this would not solve the specific issues in the steel industry, and indeed should apply to all companies regardless of sector, it would provide a crucial, reliable lifeline to communities where many depend upon these pension payments. Keeping money moving through the local economy would prevent large scale downturns or negative employment spirals in the businesses frequented by steel workers, pensioners and their families.

This is, however, only a stop-gap measure and pursuing it in isolation would only staunch the bleeding rather than set the industry on a sustainable path. For that to happen, Canadian policymakers must realize that they operate in a global environment as far as products like steel are concerned, and that our markets for exports in this regard are often restricted by the policies of other jurisdictions.

"Buy America" provisions in U.S. infrastructure bills, for instance, impose a huge barrier for Canadian-made steel to get to market, given how much of the end-use product for steel is in public works and the nature of the U.S. as our largest trading partner. Though it is important to begin to develop alternate markets for export, such as Europe and developing nations like China, the reality is that Canada remains isolated by both geography and by the fact that those countries tend to already have large homegrown steel industries to provide for their needs.

American markets in the short term, more refined products in long term

High-quality finished steel products that require a more specialized technological and skills basis to create, ought to become more of a norm in the industry. To the extent that these trends are ongoing, they should be recognized and encouraged by public sector investment in research, skills training and technology. This transition towards a steel industry that upgrades its product more and can thereby compete effectively on a global footing will be a longer-term process and may take a number of years to fully materialize.

Therefore, recognizing that the main markets for Canadian-produced steel for the foreseeable future are likely to remain as the United States and the domestic market, government investment should be made to maximize employment outcomes in the industry.

At both the provincial and federal levels, governments should enact domestic content requirements for steel and other products in involved in construction. Given the recently announced commitments to increased infrastructure spending at both levels of government, these requirements would greatly assist in increasing steel industry viability over the medium term.

Ring of fire

This requirement should be linked to the move towards green jobs investment in carbon-emissions reducing initiatives, both in terms of adding the concrete components to wind turbines, solar panels and the like and with the knowledge that the reduction in shipping emissions from buying Canadian, as opposed to foreign, steel. Encouraging greater integration of the internal steel supply chain should therefore be seen as a key goal.

Finally, Ontario specifically should recognize that it sits atop a golden opportunity of natural resources which could provide the steel industry with a sustainable future for decades to come, if properly developed and managed. The long-stalled Ring of Fire development should be seen not purely as a natural resource project, but, rather, as a full-cycle process which could create thousands of jobs at all levels.

Of course, the project must proceed on the consent and with the collaboration of local First Nations and other communities, together with strong environmental protections. With this said, mandating that all resources mined through the Ring of Fire be fully processed in Ontario and not shipped away would serve to create many more jobs directly and in spin-offs. This should be a first priority concern for all levels of government when giving approval to mining projects, along with the development of all types of infrastructure to be able to get raw resources to in-province processing centres.

Doing all of these things will not be easy, and it will involve taking on company owners to support workers and communities. It should not be forgotten that, even when these plants were operating at peak capacity, struggles over working conditions, pay and benefits were common occurrences.

The urgency of these struggles has only been added to by the industry's recent downturns, but, the essence of the issue remains the same. Rebuilding Ontario's steel industry as a centre of high-paying and increasingly green-collar jobs is a large task, and one that can only happen through the actions of workers and the communities they are a part of. These workers are accustomed to fighting, though, and there's no reason to give up now.

Carter Vance is a student in the Social Work Program at Algoma University, Youth Officer of the Sault Ste. Marie New Democratic Party Riding Association and active in a variety of social movements. He also hosts the podcast The Affair's Current.

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